Standard Costing - Dani Ki Costing - CA IPCC Video Lectures
Standard Costing - Dani Ki Costing - CA IPCC Video Lectures | Standard Costing - Dani Ki Costing - CA IPCC Video Lectures | Standard Costing - Dani Ki Costing - CA IPCC Video Lectures | Standard Costing - Dani Ki Costing - CA IPCC Video Lectures
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Dani
Ki Costing
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Standard Costing
An organization sets some standard for cost and quantity of
different resources acquired in the manufacturing process. It is generally self
derived or benchmark of the industry. Standard Costing in simple words is the
technique of costing to find the weakness of the organization by comparing the
standard cost and the actual cost incurred for any activity. Such difference is
known as variance. It can be either
positive or negative.
Standard costs are determined by dividing them into three main parts
viz. Direct Material Cost, Direct Labor Cost and Overheads. Standard costing
technique is very effective but it is very difficult to define standards. For
example if the standards are established for material specification and it may
happen that material of such specification is not available then the standards
could not be achieved.
Proper care is to be taken while setting up standards so that
accuracy and relevance can be achieved. Different kinds of standards are used
such as ideal standards, normal standards, basic or bogey standard, current
standard etc. Standard costing is of much importance as it is helpful to
predict future cost that will help in making decision. It also helps in setting
target that acts as organizational goal that is to be achieved.
Standard costing is a technique used in budgeting and evaluation of
performance. It is of great significance in interim profit measurement and
valuation of inventory. Standard costing is not a one time event, it is a
procedure. The process starts with setting of standards and is completed on
disposition of variance. It helps in finding out different controllable and
uncontrollable variances.
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